There are several instruction-related metrics that are important to understand if you want to reduce costs.
First, you need to understand how much each course costs on average.
In general, we look at total faculty compensation and layer in the cost of academic administration and institutional support. Then, we divide that cost by the number of credits delivered to students to find the instructional delivery cost. It is important not to exclude the cost of faculty release credits, as those are part of instructional costs.
There are great debates about how that number is different based on individual faculty members, but in general, understanding this for the institution is the best starting point. Then you can do the same exercise to determine the average cost of an adjunct vs. faculty or for each discipline (or department). Having these metrics enables you to examine whether average compensation is dramatically different from one discipline to the next.
Next, we need to look at net revenue per student, including room and board. That comes to approximately $30,000 per student for a small private institution. Knowing this number is essential. Dividing the net tuition per student by the number of courses each student takes on average determines how much revenue each student contributed per course. It also helps you calculate the amount of potential revenue you would lose if you cut a low enrolled program.
Now you can calculate how many students (on average) you need in each course to break even by taking the average cost of a course divided by the per-student contribution to each course. I recommend staying at a high level and calculating at an institutional or school level and then by discipline.
You can use this as a guideline to determine what your average class size should be.
Even if you never meet the exact target for every course, you will understand ways to save. For example, increasing lower-level class size can help counteract the effects of decreased upper-level class size to reach the average.
If you cannot meet that average for any one discipline, then it is time to think about which courses you might need to eliminate. For example, then we examine the upper-level course size and the lower-level course size, we often see significant differences. If you have an average class size for the English department of 12, made up of lower-level courses averaging 22 and upper-level courses averaging 6, you may ask if you can afford to offer a degree in English. Eliminating those low enrolled courses means you will also need to reduce available faculty credits in that discipline.
Maintaining a balance between the use of adjunct and full-time faculty is important, as well. Hiring adjuncts increases flexibility, but faculty members may have more teaching and advising experience.
This brings me to student to faculty ratio.
Your ideal ratio depends on your break-even average class size, and faculty count. An average private institution with 2,000 students or fewer needs an average class size of approximately 16-18 students. This often translates to an average of eighteen students to one faculty member depending on cost structure and faculty releases.
You will need to consider part-time faculty, too. For example, if you have 66 part-time faculty working about .2 FTE that means that they count for 13 (66 x .2) FTE faculty. This needs to be considered as part of your total faculty student ratio.
I work with many institutions to analyze benchmarks based on peer data. The problem is that many of those peers at institutions with 2,000 students or fewer are losing significant money and are not financially healthy. Even if they reduced their faculty size to meet their averages, they probably could not return to financial sustainability. This is where looking more deeply into your specific situation is essential. Understanding the cost of delivery for each discipline by upper-level and lower-level courses, the amount each student contributes to a course, and the break-even ratio of students will allow you to set better financial targets.
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